ARUN KUMAR SYNTHEITICS P.LTD, MUMBAI V. ITO RG 4(1)(3), MUMBAI

ITA 2259/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55189 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Share purchase agreement; Additional evidence; Set aside
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) AND SHRI VIJAY PAL R AO (JM) ITA NOS. 2259/M/2010 ASSESSMENT YEAR:2006-2007 M/S ARUN KUMAR SYNTHETICS PVT. LTD., SANJAY BUILDING NO. 5/B, GALA NO. 265, 2 ND FLOOR, MITTAL INUDSTRIAL ESTATE, ANDHERI EAST, MUMBAI 400 059. PAN: AAACA9759M THE INCOME TAX OFFICER, RAGE 4(1)-(3), 6 TH FLOOR, AAYAKAR BHAVAN, R.NO. 637, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY: REVENUE BY: SHRI LALCHAND CHOUDHARY SHRI P.K.B. MENON DATE OF HEARING: DATE OF PRONOUNCEMENT: 04-08-2011 07-09-2011 O R D E R PER VIJAY PAL RAO (JM): THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.01.2010 OF CIT (A) FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. ON THE FACTS AND IN LAW, THE CIT (A) ERRED IN CONF IRMING THE ACTION OF THE AO OF TREATING THE CAPITAL GAIN ARISING ON SALE ON AN INDUSTRIAL GALA AS SHORT TERM CAPITAL GAIN INSTEAD OF LONG TER M CAPITAL GAIN CLAIMED BY THE APPELLANT. 2. ON THE FACTS, THE CIT (A) ERRED IN MAKING CERTAIN I NCORRECT OBSERVATI8ONS IN PAPA 2.9 OF HIS ORDER. ITA NO. 2259/M/2010 M/S ARUN KUMAR SYNTHATICS (P) LTD. 2 3. THE ASSESSEE PURCHASED AN INDUSTRIAL GALA NO. K- 2, 4 TH FLOOR, THE BUILDING KNOWN AS TEX CENTRE PREMISES CO-OPERATIVE SOCIETY L TD., 26A CHANDIVALI, SAKI VIHAR ROAD, ANDHERI (E), MUMBAI FOR CONSIDERATION O F RS. 6,90,000/- VIDE AGREEMENT DATED 27.05.1994. THE PAYMENT WAS TO BE M ADE AS PER THE CLAUSE I OF THE TERMS AND CONDITIONS OF THE AGREEMENT AS UNDER: (1) RS. 2,30,000/- (RUPEES TWO LAKHS THIRYTY THOUSAND O NLY) (BEING APPROXIMATELY 15%) PAID BY THE PURCHASER/S O N OR BEFORE EXECUTION OF THESE PRESENTS AS EARNEST MONEY AND/OR DEPOSIT: (2) THE BALANCE SUM OF RS. 4,60,000/- (RUPEES FOUR LAKS SIXTY THOUSAND ONLY) IN THE FOLLOWING MANNER: (A) RS. 75,900/- (RUPEES SEVENTY FIVE THOUSAND NINE HUNDRED ONLY) ON COMPLETION OF 1 ST SLAB. (B) RS. 75,900/- (RUPEES SEVENTY FIVE THOUSAND NINE HUNDRED ONLY) ON COMPLETION OF 2 ND SLAB. (C) RS. 75,900/- (RUPEES SEVENTY FIVE THOUSAND NINE HUNDRED ONLY) ON COMPLETION OF 3 RD SLAB. (D) RS. 75,900/- (RUPEES SEVENTY FIVE THOUSAND NINE HUNDRED ONLY) ON COMPLETION OF 4 TH SLAB. (E) RS. 75,900/- (RUPEES SEVENTY FIVE THOUSAND NINE HUNDRED ONLY) ON COMPLETION OF 5 TH SLAB. (F) RS. 80,500/- (RUPEES EIGHTY THOUSAND FIVE HUNDRED ONLY) ON COMPLETION IN ADDITION TO THE ABOVE PAYMENTS THE PURCHASER SHA LL ALSO PAY TO THE DEVELOPER A SUM OF RS. 46,000/- ( RUPEES FORTY SIX THOUSAND ONLY) BEING AMOUNT OF DEVELOPMENT CESS ON THE EXECUTION OF THIS AGREEMENT. 4. THE ASSESSEE SOLD THE SAID INDUSTRIAL GALA ALONG WITH THE SHARE CERTIFICATE AND MEMBERSHIP OF THE SOCIETY DURING THE YEAR FOR A TOTAL CONSIDERATION OF RS. 20,70,000/-. THE ASSESSEE CLAIMED LONG TERM CAPITA L GAIN OF RS. 3,82,520/- ON SALE OF THE SAID INDUSTRIAL GALA AFTER CLAIMING THE BENEFIT OF INDEXATION. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION U/S 54EC AS THE SALE CONSIDERATION OF RS. ITA NO. 2259/M/2010 M/S ARUN KUMAR SYNTHATICS (P) LTD. 3 5,50,000/- HAS BEEN INVESTED IN THE BONDS OF NATION AL HOUSING BANK. THE ASSESSING OFFICER TREATED THE SURPLUS ON SALE OF IN DUSTRIAL GALA AS SHORT TERM CAPITAL GAIN AND APPLIED THE PROVISIONS OF SEC. 50C . ACCORDINGLY, THE ASSESSING OFFICER TOOK THE MARKET VALUE OF THE PROPERTY AT RS . 32,58,200/- AS PER THE VALUE SHOWN BY THE ASSISTANT DEPUTY REGISTRAR. ON APPEAL , THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER TREATING THE CA PITAL GAIN AS SHORT TERM CAPITAL GAIN. HOWEVER, HE HAS DIRECTED THE ASSESSING OFFIC ER TO TREAT THE FULL MARKET VALUE OF THE INDUSTRIAL GALA IN QUESTION AT RS. 26,93,000 /- AS PER THE ORDER U/S 50C OF THE VALUATION OFFICER AND COMPUTE THE SHORT TERM CA PITAL GAIN ACCORDINGLY. 5 BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE ACQUIRED THE INDUSTRIAL GALA VIDE AGREEMENT DATED 2 7.05.1994 AND MERELY POSSESSION OF THE SAID GALA WAS GIVEN ON 1-1-2005 W OULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE BECOME ENTITLED TO THE RIGHT IN THE INDUSTRIAL GALA ONLY ON 1-1-2005. THE ASSESSEE ACQUIRED THE RIGHT IN THE SAID PROPERTY WHEN THE ASSESSEE ENTERED INTO AN AGREEMENT IN THE YEAR 1994 . THERE WAS NO FURTHER DOCUMENT EXECUTED SUBSEQUENT TO THE AGREEMENT DATED 1994 EITHER BEFORE OR AFTER THE COMPLETION OF CONSTRUCTION OF THE SAID IN DUSTRIAL GALA. HE HAS POINTED OUT THAT THE SAID INDUSTRIAL GALA WAS REGISTERED IN THE NAME OF THE ASSESSEE IN THE YEAR 1994 ITSELF EVEN THE COMPLETION OF THE PROPERT Y WAS ON 10-03-1998 AS PER THE OCCUPATION CERTIFICATE ISSUED BY THE BRIHANMUMBAI MAHANAGARPALIKA . HE HAS FILED THE COPY OF THE OCCUPATION CERTIFICATE DA TED 10.03.1998 AT PAGE 93 OF THE PAPER BOOK. THE LEARNED AR HAS SUBMITTED THAT THE DOCUMENTS LETTER DATED 26.02.2010 FROM THE SOCIETY, COPY OF THE SHARE CERT IFICATE DATED 20.11.2006 AND COPIES OF OCCUPATION CERTIFICATE ISSUED BY THE BRIHANMUMBAI MAHANAGARPALIKA ARE GATHERED BY THE ASSESSEE AFTER THE ORDER OF THE LD. CIT (A). HE HAS FURTHER ITA NO. 2259/M/2010 M/S ARUN KUMAR SYNTHATICS (P) LTD. 4 SUBMITTED THAT THESE DOCUMENTS WERE NOT AVAILABLE W ITH THE ASSESSEE BUT WERE IN THE POSSESSION OF THE SOCIETY AND ONLY AFTER THE OR DER OF THE LD. CIT (A), THE ASSESSEE HAS PURSUED THE MATTER WITH THE SOCIETY AN D OBTAINED THESE DOCUMENTS. ACCORDINGLY, THE LEARNED AR HAS URGED THAT THESE DO CUMENTS MAY BE ADMITTED IN SUPPORT OF THE CLAIM OF THE SOCIETY. 5.1 ON THE OTHER HAND, THE LEARNED DR HAS VEHEMENTL Y OBJECTED THE PRAYER OF THE ASSESSEE ON ADMISSION OF THESE DOCUMENTS AND SU BMITTED THAT WHEN THE ASSESSEE EVEN AFTER SUFFICIENT OPPORTUNITIES DID NO T PRODUCE THE DOCUMENTS BEFORE THE ASSESSING OFFICER AS WELL AS LD. CIT (A), THEN WITHOUT EXPLAINING THE SUFFICIENT REASONS, ASSESSEE CANNOT BE ALLOWED TO PRODUCE THES E DOCUMENTS FIRST TIME AT THIS STAGE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD ON THE POINT OF CONSIDERATION AND ADMISSION OF THE DOCUMENTS WHI CH WERE NOT PRODUCED BEFORE THE LOWER AUTHORITIES. IT IS PERTINENT TO NOTE THA T THE SHARE CERTIFICATE WAS ISSUED BY THE SOCIETY ONLY AFTER THE ASSESSEE TRANSFERRED THE INDUSTRIAL GALA. THE COPY OF THE LETTER DATED 20-06-2010 IS ALSO SUBSEQUENT TO THE ORDER OF THE LD. CIT (A). AS FAR AS OCCUPANCY CERTIFICATE IS CONCERNED, SINCE TH E SAID CERTIFICATE WAS ISSUED TO THE ARCHITECT OF THE DEVELOPER AND THEREAFTER IT WA S IN THE POSSESSION OF THE SOCIETY; THEREFORE, WHEN THE ASSESSEE HAS ALREADY T RANSFERRED THE GALA, THESE DOCUMENTS WERE NOT SUPPOSED TO BE IN THE POSSESSION OF THE ASSESSEE. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 6-4-2011 FOR ADMISSION OF THE ADDITIONAL EVIDENCE. SINCE THE OCCUPANCY CERTIFICATE IS A MAT ERIAL DOCUMENT FOR DECIDING THE ISSUE IN QUESTION ON THE POINT AS TO WHEN THE PROPE RTY IN QUESTION WAS COMPLETED. THE CLAIM OF THE ASSESSEE HAS BEEN DENIED BY THE LO WER AUTHORITIES MAINLY ON THE ITA NO. 2259/M/2010 M/S ARUN KUMAR SYNTHATICS (P) LTD. 5 GROUND THAT SINCE THE PROPERTY IN QUESTION WAS NOT IN EXISTENCE; THEREFORE, THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY FOR MORE THAN 36 MONTHS PRIOR TO THE SALE. AS A MATTER OF FACT THESE DOCUMENTS WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) AND THE SAME ARE MATERIAL AND VITAL EVIDENCE IN SUPPORT OF THE ASSESSEES CLAIM OF LONG TERM CAPITA L GAIN. THEREFORE, IN THE INTEREST OF JUSTICE, WE ADMIT THESE DOCUMENTS AS AN ADDITIONAL EVIDENCE AND SET ASIDE THE ISSUE TO THE RECORD OF THE ASSESSING OFFI CER FOR VERIFICATION AND EXAMINATION OF THE SAME AND DECIDE THE ISSUE AS PER LAW. NEEDLESS TO SAY THAT THE ASSESSEE BE GIVEN AN APPROPRIATE OPPORTUNITY OF HEARING BEFORE PASSING THE FRESH ORDER ON THE ISSUE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 7 TH SEPTEMBER, 2011 SD/- SD/- (PRAMOD KUMAR) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 07-09-2011 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR A BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI